The Debate That Wasn't

One would hope that citizens of a wealthy, vibrant democracy could be moved to openly debate issues of vital national importance. A case in point is an issue as fundamental as shifting our economy from creating and selling manufactured goods to one that provides services in a global marketplace. Such a sea change would surely leave millions of skilled workers adrift; you'd think they would like to have a say.

But this is the United States, and that debate is, unfortunately, buried beneath a ton of rhetoric -- mostly industry-funded nonsense that made the "transition" as smooth as possible for corporate movers and shakers.

For believers in unfettered "free" markets, it is simply a matter of faith that the logic of the private sector will eventually lead to greater prosperity for all, even if some are steam-rolled in the process.

Job displacement and economic insecurity are simply the results of increased productivity, technological advances and the availability of cheaper labor overseas -- all part of the Natural Order of Things and a consequence of economic progress that is to be embraced rather than questioned. The belief is immune to contradictory data, and its adherents have little patience for dissent, and they have the budgets to render it irrelevant anyway.

And they don't face much dissent. Democrats, as a result either of being cowed by big-business's powerful echo-chamber or out of loyalty to their corporate sponsors, have offered tepid opposition to the status quo, occasionally attempting to craft a vaguely populist message like candidate Kerry's lame "Benedict Arnold CEO" line, but never questioning what underlies the New Economy.

That non-debate has been a decades-long double-whammy for average Americans. On the one hand, they've had to adapt to a free-wheeling, world-wide cowboy economy, without insulation from global competition and facing the prospect of seeing their jobs outsourced and off-shored. With the decline in unions, more and more of the jobs that are out there have lower wages, are less secure and don't come with the same benefits the parents of today’s workers took for granted.

At the same time, the rise of the New Conservative movement with its knee-jerk disdain for government and deeply-held belief in the value of "labor flexibility," has systematically picked away at the fabric of the social safety nets -- from the government and from employers--that provided previous generations with a sense of security and prosperity. It's been a slow death by a thousand cuts.

Consider the fact that no cheering treatise about the wonders of economic liberalization doesn't have a few sentences -- often buried deep in the concluding paragraphs -- about those who will be "displaced" by a shifting economy and require "adjustment." These are, of course, euphemisms for real Americans who have lost the economic security once taken for granted in the wealthiest country in the world and who now find it much more difficult to sustain a decent, middle-class life.

Their task wasn't made easier by the rise of Reaganomics. When Ronald Reagan declared, "government is the problem," he set about fixing it on the back of American workers. Upon taking office in 1981, he slashed the benefits available under the Trade Adjustment Act (TAA), which was passed under Kennedy to "render assistance to those who suffer as a result of national trade policy." Benefits under TAA have remained almost flat since the early 1980s. Reagan, and later the first Bush, would both attempt to kill off TAA altogether, just when the "New Economy" was gathering steam. Some on the right continue to oppose the program, calling it that most wretched of conservative bugaboos: “welfare.�

The Los Angeles Times' Peter Gosselin noted that in the mid-1970s, unemployed workers could collect up to 15 months of unemployment compensation. But in recent years, "Congress had pared the program to just six months ... And state eligibility restrictions imposed in the late 1970s and early '80s shrank the fraction of the workforce entitled to collect benefits ... " Last year, only a little more than a third of those unemployed collected benefits.

And consider that in 1980 the federal government spent $27.3 billion annually for the Comprehensive Employment and Training Act, or CETA. Now, after 25 years of "Reaganomics," we spend only $4.4 billion on CETA's successor, the Workforce Investment Act.

Recent Democratic efforts to extend trade adjustment assistance programs for the manufacturing sector to white-collar workers have been shot down in Congress.

According to economist Lori Kletzer, author of Job Loss from Imports: Measuring the Costs, about 17 million U.S. workers lost their manufacturing jobs between 1979 and 1999, about 40 percent because of trade. Two-thirds of those workers earned less when they found a new job, a quarter of them losing more than 30 percent of their old earnings.

But that's just the tip of the iceberg. Economists estimate [PDF] that nearly one third of all American jobs today consist of "on-call work and day labor, temporary-agency employment, employment with contract companies, independent contracting, other self-employment, and part-time employment."

With the decline in steady jobs, working families have seen less income stability. An analysis by the Los Angeles Times found that in the early 1970s, the inflation-adjusted incomes of most middle-income families was relatively constant, going up or down by no more than about $6,500 a year. But today they're on a roller coaster, with year-to-year fluctuations of as much as $13,500. A medical emergency or other unforeseen crisis on the low swings can be devastating.

All of which leaves us with a values debate. If we accept every argument of the free-market fundamentalists about the great benefits that the transition to a wide-open global economy has brought to the U.S. as a whole, and if every one of those free-marketeers concedes that certain people will be hurt at the same time, common sense would suggest public policies that might lessen the blow for those who are sacrificed on the alter of growth -- policies designed to help American families cope with the transition.

But this is the United States, and what might seem quite intuitive is, unfortunately, buried beneath a ton of ideology -- most of it nonsensical.

The Wrong Way

Insurance giant MetLife recently did a study of employee benefit trends and found that only about a quarter of employers pick up the full costs of healthcare coverage these days, and just about a third pay the bills for disability and life insurance. All as healthcare costs have shot through the roof in the past two decades.

In the past 30 years, defined contribution plans -- like 401Ks -- have become more common than old-school defined benefit plans (a.k.a, “pensions�). Unlike defined benefit plans, the government doesn't guarantee 401Ks. According to the Economic Policy Institute, the share of households that had a defined contribution plan rose by 70% from 1979 to 1998, and the share of households covered by a traditional employer pension declined by 22%. Defined contribution plans shift risk from employers, with government backing, to employees, without it.

This is a recurring theme. Across the board, from bankruptcy to environmental and consumer protections to the Bush Team's Ownership Society plans to privatize Social Security and Medicare, the government is responding to Americans' increased insecurity by heaping on more and more risk. A government that once served to insulate individuals from the uglier side of capitalism has to a large degree turned its back on the notion of shared risk over the past 30 years.

Jacob Hacker, a Fellow at the New America Foundation, put it this way:

---

Seemingly overnight, Americans are experiencing the roller-coaster ride of life on the other side of insecurity's frontier. The instability of families' incomes has increased dramatically over the last 20 years. The typical family doesn't rise steadily to greater heights on the economic ladder, but like a volatile stock, its income oscillates wildly from year to year. And when families fall, they fall farther and faster, and government and the private sector do less to slow their descent.

The insecurity facing American families today mirrors that experienced during an earlier economic transition: from agriculture to industry. Then, the solution was bold and forward-looking, as FDR rammed his New Deal legislation through a depression-shocked Congress. On the third anniversary of the passage of the Social Security Act, FDR said:

As the Nation has developed, as invention, industry and commerce have grown more complex, the hazards of life have become more complex. ...There is still today a frontier that remains unconquered, an America unclaimed. This is the great, the nationwide frontier of insecurity, of human want and fear. This is the frontier -- the America -- we have set ourselves to reclaim.

If we can't recommit ourselves to FDR's ideal, we may soon see Ronald Reagan staring down from Mt. Rushmore as a testament to our social pride in self-inflicted economic pain -- literally set in stone.

This is Part I of a two-part series on the trade debate. Next: Could a new approach to dealing with trade add up to winning politics for the Democratic Party?